It's that time of year again...time to start looking forward to high expectations and continued growth in the real estate business for 2007. More importantly, the Central Texas real estate market. While the rest of nations economy slowed down in 2006, Texas as a whole continued a moderate, but strong rate of growth. This was due in large part to the declining unemployment rate and improved growth of the commercial real estate markets throughout Texas.
Commercial construction helped to increase employment and also provided income to business in and around Texas. The rate of commercial construction does not appear to be slowing for 2007. In fact, current projections show that more commercial construction is slated for 2007. The main focus will be a rise in construction costs over the next year. If costs continue to rise in line with the rest of the nation, then there is a likelihood construction will slow. Until then, it's "full steam ahead".
Jobs played an important role, as usual, in the overall real estate market for 2006. Because there were more Texans working, there were more Texans buying homes. For 2007 the job market will look to remain strong and continue driving the economy as a whole. If costs can remain low for businesses, and if profits can remain healthy, then the job market will continue its' modest pace and thus the housing market will remain fluid and robust.
Finally, 2006 saw a pause in interest rate hikes by The Federal Reserve Board. This was great news for mortgage interests rates. Mortgage rates fluctuated quite a bit in 2006, but they never proved to be an issue for new home buyers. For 2007, look for interest to stabelize even more. The consensus right now is that the Federal Reserve will not make any moves for the first quarter of 2007. The Fed is closely watching inflation and right now it appears that the nations unemployment rate in 2007 will tick slightly higher as the economy as a whole cools. Barring any unexpected rises in prices due to energy costs or other variables, the rate of inflation should gradually lower to The Fed's comfort level of between 1 and 2%.
Overall, the signs point to a moderate but sustainable growth in the Central Texas real estate makret. We are in a unique position in that Texas is not feeling the "pinch" economically that the rest of the nation has and will continue to experience in 2007. Better yet, we benefit greatly from that "pinch". The national economic outlook effects interest rates and thus gives Texas homebuyers a premium when it comes to purchasing a new home. We can continue to afford homes as long as our economy continues to produce new jobs and interest rates remain low. Once again, 2007 should provide Texans a continued opportunity for home affordabilty.
Stay Strong & Best of Luck in 2007 !
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